Israel's former Ambassador to China, Ora Namir, claims that former US President Bill Clinton made the convening of the Camp David summit in July 2000 conditional on the cancellation of the Phalcon deal with China. The Phalcon early warning plane was built by Israel Aircraft Industries (IAI).
During the summit, then-Prime Minister Ehud Barak announced the cancellation of the $250 million deal, as well as the torpedoing of Chinese options to buy three more planes for a total of $1 billion.
Namir told the Voice of Israel today, "Israel ought to be severely punished for its behavior in the Phalcon affair. China is the world's second-strongest power in the world after the US, and the Americans warned us prior to the negotiations (with China). There was some kind of agreement during the [former Prime Minister Yitzhak] Rabin period."
Namir claimed she had been given no information about the deal. "I was notified about its cancellation after the fact, while on a private holiday in Israel. I went to Barak, whom I think bears great responsibility for not telling the truth to the Chinese in time."
Namir said that during his state visit to Israel, President of the Peoples Republic of China Jiang Zemin was not notified that the deal had been cancelled. "Clinton told Barak unequivocally, 'If you do not officially cancel the Phalcon deal, there will be no Camp David.' I am speaking as a primary source."
"Barak asked me to inform the Chinese about the cancellation, but the trip was never made. To this day, I do not know why. The connection between Barak and Zemin was then ended, as Zemin was not available (to Barak), even for a phone call."
"IAI is a major employer in Israel, but I think our guys thought everything would ultimately be sorted out with the Americans. The cancellation was not due to US corporations, but to US fears about growing Chinese power."
Ehud Barak said in response, "Her [Namir's] two claims are incorrect and misleading." He declined to explain further, because of, in his words, "the sensitivity about the Phalcon affair and the vital interests of the State of Israel."
The Ministry of Defense published the following statement relating to stories in the press on the cancellation of the deal to sell Phalcon planes to the People's Republic of China :
”Israel has recently begun deliberations with the Government of China in order to clear up any misunderstandings, and remove the Phalcon issue from the bilateral agenda through mutual understanding and agreement between the two countries."
”China, for its part, has indeed claimed monetary compensation, the range and amount of which have yet to be finalized. "
”Israel, for its part, attributes great importance to its relations with China, and will do all it can to maintain, and expand them.”
The IAI stated in response, "All the steps in the Phalcon affair was done with the approval of the authorized government groups – the Prime Minister's Bureau and the Ministry of Defense. The Ministry of Defense was updated about the project's progress. It is not acceptable to now create the impression that the IAI management acted on its own judgement or tricked anyone."
The Phalcon is a Russian Ilyushin IL-76 on which electronic devices developed by Elta Electronic Industries were installed. The plane is still at the IAI hangar at Ben Gurion Airport. China paid most of the price of the plane in advance, and it is actually Chinese property.
Published by Israel's Business Arena on 17 December 2001